Aviation Boost: NAICOM Rolls Out Bold New Leasing Rules

By Oluwakemi Kindness

The National Insurance Commission (NAICOM) has officially launched the Revised Regulation on Insurance for Leased and Financed Aircrafts.

The revised regulation seeks to strengthen Nigeria’s aviation and insurance industries, enhance investor confidence, and promote ease of doing business in the country.

The unveiling held in Abuja on Monday at the Office of the Minister of Aviation, Festus Keyamo, SAN, with other key stakeholders in the Insurance and Aviation sectors present.

The revised regulation is the result of extensive consultations with industry players, including aviation operators, insurers, international financiers, and lessors

In his remarks, the Minister of Aviation and Aerospace Development, Festus Keyamo, SAN, commended the National insurance Commission for taking up the task of ensuring Nigeria the revision which now places the nations aviation sector on an enviable height internationally.

He said “what we have today, the product we have today is a complete Nigerian position that is also in tandem with what the world also expects”.

“The aviation working group has looked at what they have done, they have agreed with it, they have shared it with most of the leaders and financials across the world, and today we have a complete revised insurance regulations on leased aircraft in Nigeria, which is the official Nigerian position”.

For the Commissioner for Insurance, NAICOM, Olusegun Ayo Omosehin, he described the regulation as a transformative framework that will foster certainty, predictability, and stability in the aviation insurance market.

Speaking on some of the core changes in the regulation, Omosehin said “the major concern of airline operators before now had always been their inability to meet the requirements of the financiers”.

“This requirement in the contract requires about 95 per cent of the insurances of this aircraft to be placed offshore*.

“After a series of engagements and in line with our extant laws, we are able to agree a position that allows local operators who are taking those policy, taking aviation policy on a net account basis to be able to cede as much as 90 per cent to the international market”.

“And we have also stated the condition or the requirement for those capacities that are required, which are financial strength rating of A minus S&P, standard and poor, or A for A and best*.

“So once those requirements are met by the lessors, then those securities are acceptable to us as Nigerians”.

“The second part of it is for those local entities that are taking it on their gross account, i.e., with their reinsurance capacity, they can take upward, they can reach upward of 70 per cent. But also, that reinsurance capacity must then be acceptable to the lessors”.

“The security they use must be acceptable to the lessors. Those are the two critical areas on the new regulation”.

The NAICOM boss noted that “all of this must passed through the National Insurance Commission for certification before those insurances can then be approved and proceeded”.

Omosehin further noted that, “With the right insurance framework, Nigeria’s aviation sector can overcome challenges, adapt to changes, and thrive in an ever-evolving landscape.” This revised regulation signals Nigeria’s readiness to attract aviation business and soar to new heights.